Since 2018, falling nearly 22% from highs above $110,000 in September to current levels around $88,000, marking a clear reversal from the bull run earlier in the year. This decline, driven by a mix of macroeconomic headwinds such as rising trade tariffs between the U.S. and China, persistent concerns about inflation, and lowered expectations for aggressive rate cuts from the Federal Reserve, has erased much of the post-election optimism that drove Bitcoin to historic highs near $126,000 at the beginning of the fourth quarter. The absence of the traditional 'Santa Claus rally' in cryptocurrencies, along with over $1 billion in liquidations in the derivatives markets, has increased investor caution as 2025 approaches its end.
✏ Key Factors of the Drop:
Geopolitical tensions, particularly renewed threats from President Trump regarding tariffs against China, triggered a risk-off sentiment that transferred from stocks to cryptocurrencies, amplifying Bitcoin's beta relative to global markets. The Fed's decision in December to implement only a modest 25 basis point cut—below market hopes—dashed expectations for a liquidity-driven rebound, leading institutions and whales to take profits. On-chain data reveals an increase in exchange inflows and a rise in long-term holder sales, resonating with past correction patterns in the fourth quarter where thin liquidity during the holidays exacerbated volatility.
✏ Historical Comparison:
Unlike the 2018 collapse, which saw an 80%+ drop amid the broader market euphoria that turned into despair, the fourth quarter of 2025 feels more like a mid-cycle pullback in an ongoing bull market, with Bitcoin still up 18% for the year despite the quarterly drop. Weak previous fourth quarters, like the 15% drop in 2022, often preceded explosive recoveries—Bitcoin surged 300% in 2023 after that period—suggesting that this could be consolidation rather than capitulation. Metrics like the MVRV Z-Score at 1.8 indicate undervaluation relative to historical norms, potentially setting the stage for a rebound in 2026 if regulatory clarity materializes under the administration #TRUMP .
